Eastern State Hospital's new leader will move from hospital in Indiana

Indiana psychiatrist Peggy Stephens has been appointed to lead Eastern State Hospital at its new $129 million Lexington campus, the University of Kentucky announced Monday.

Stephens, a former part-time physician at Eastern State, will start work as chief administrative officer and chief medical officer on July 1. UK Healthcare, which will manage the hospital, will pay Stephens' $300,000 annual salary, UK spokeswoman Jodi Whitaker said.

The Louisville native will oversee the opening of the 239-bed hospital in August at UK's Coldstream Research Campus in Lexington. She'll also be an associate professor on the UK faculty.

Since 2005, Stephens has been superintendent and CEO of the 150-bed Madison State Hospital in Madison, Ind.

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"We are fortunate to have Dr. Stephens joining us as part of our team," said Michael Karpf, UK's executive vice president for health affairs. "Her impressive track record of leadership, collaboration and innovation make her the ideal leader of the new Eastern State Hospital."

The new campus will replace the pre-Civil War-era Eastern State Hospital, the second-oldest psychiatric hospital in the country. That property, at Newtown Pike and Fourth Street, is being reconfigured as a new campus for Bluegrass Community and Technical College.

The new 300,000-square-foot hospital has been described as state-of-the art. In addition to providing acute inpatient treatment, it will feature an expanded recovery mall offering a broad range of services and classes to ease patients' transition into the community. Eastern State's programs include four personal-care homes that encourage the development of transitional life skills; a neurobehavioral unit for patients with brain injuries; and a long-term care unit for patients with psychiatric disabilities.

Stephens is an award-winning psychiatrist and administrator with experience in both the public and the private sectors, UK's news release said.

She was the key architect in clinical and operational changes at Madison State Hospital and was on Indiana's Mental Health Transformation Work Group from 2005 to 2011.

The position was advertised and applicants were recruited nationally, Whitaker said.

The Madison Courier reported in 2010 that Stephens was the highest-paid non-university state employee in Indiana. She was paid $243,000 as both superintendent and medical director, the newspaper reported. In an email Monday, Stephens said her current salary is $262,000.

Stephens received bachelor's and master's degrees from the University of Louisville, and she completed her medical degree at the UK College of Medicine.

She became familiar with Eastern State while she was training to be a doctor in Lexington, the news release said.

During her residency in psychiatry and addiction psychiatry at UK's Chandler Hospital, Stephens was a part-time physician at Eastern State.

Stephens is a Distinguished Fellow in the American Psychiatric Association and is certified by the American Board of Psychiatry and Neurology. She is a former faculty member of Harvard University Medical School and is past president of the Kentucky Medical Psychiatric Association.

"I am truly excited to be returning to my home state of Kentucky and to the University of Kentucky, particularly for the unique opportunity to open this wonderful new facility with such endless potential," Stephens said in the news release.

In an interview Monday, she said "we're building on a very strong tradition at Eastern State Hospital. Over their long history they have provided care for so many citizens and their families, we are just going to keep building on that tradition."

The management will be a partnership among UK, the Kentucky Cabinet for Health and Family Services, and Bluegrass.org.

Bluegrass.org is composed of four major corporate entities including Bluegrass Community Mental Health Care and Bluegrass Regional Psychiatric Services, which has operated Eastern State Hospital under a contract with the state, according to its website.

The Herald-Leader reported in June 2012 on questionable spending at Bluegrass Regional. Those reports led to a state audit. The audit found lax board oversight and lavish spending on executives while front-line workers went without pay raises.

In January, Gov. Steve Beshear announced that UK HealthCare would operate and manage the newly built Eastern State Hospital under a proposed $43 million contract with the Kentucky Cabinet for Health and Family Services.

Whitaker, the UK spokeswoman, described the relationship between UK Healthcare and Bluegrass in regard to the new hospital.

"UK Healthcare will manage the facility. We are negotiating a contract with Bluegrass Community Mental Health Care to continue to provide their excellent level of patient care."

"The majority of employees that will be there will be Bluegrass Community Mental Health Care employees who will be on contract with UK Healthcare," she said.

David Phelps, the acting director at Eastern State, who is listed as the director of Communities of Oakwood, a Somerset home for the mentally disabled, on the Bluegrass.org website, could not be reached for comment Monday.

As part of the deal announced in January, UK and the state signed a letter of intent in which UK agreed to meet certain performance standards.

UK's goals and performance measures include improvement of inpatient treatment, continuity of care during and after hospitalization, and an increase in the number of patients leaving the hospital to return to community living.